Eurozone GDP Q1 2016

Eurozone: Revised data show slightly smaller acceleration in Q1

May 13, 2016

Revised data show that the Eurozone economy grew slightly less than previously reported, although still picked-up pace in the first quarter of 2016. According to a flash estimate released by Eurostat on 13 May, the Eurozone economy grew a seasonally-adjusted 0.5% in Q1 over the previous quarter, which was slightly below the 0.6% reported in the new, more-timely preliminary estimate released on 29 April. Despite the downward revision, the Eurozone’s recovery remains on track and the result is still a notable acceleration over Q4’s 0.3% increase.

Although data did not include a breakdown by components, additional data suggest that the acceleration was driven by robust domestic demand, in particular by private consumption. An improving labor market and increasing real incomes are supporting household consumption and likely offsetting weakness in the external sector. The unemployment rate in March fell to the lowest level since August 2011; however, economic sentiment moderated throughout the quarter.

Looking at the individual countries within the bloc, preliminary data showed that Germany and France’s economies gained steam in Q1. Germany grew a better-than-expected 0.7% quarter-on-quarter and France’s economy accelerated to a 0.5% qoq increase. In addition, Italy’s growth inched up to 0.3% and Spain tallied another healthy 0.8% expansion. On the other end of the spectrum, Hungary and Greece contracted in Q1.

On an annual basis, the Eurozone’s economy grew 1.5% in Q1, which was a notch down from the 1.6% estimated in the preliminary release and tallied in Q4. Complete GDP data including a breakdown by components will be released on 7 June.

FocusEconomics Consensus Forecast panelists expect the Euro area economy to expand 1.4% in 2016, which is down 0.1 percentage points from last month’s forecast. For 2017, panelists expect the economy to expand 1.6%.

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